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Indian wheat sales to Iraq expected to resume

Indian wheat sales to Iraq, stalled due to quality concerns, are expected to resume after high-level visits by teams from the two countries to iron out outstanding problems, traders said on Wednesday.

A delegation from Iraq is expected to inspect cleaning facilities at western Indian ports this week while a high-level Indian delegation is leaving for Baghdad on Friday to meet Iraqi officials to explore trade opportunities, traders said.

Iraq rejected three wheat consignments from India in May, saying they did not meet its quality standards. The decision prompted New Delhi to halt sales to Baghdad until cleaning facilities were set up.

Since then, two major exporting firms have begun trial runs of their cleaning machinery and a third is in the process of putting its cleaning operations in place.

"The Iraqi delegation's visit and new grain cleaning facilities should help India resume exports. That is bound to happen sooner or later," said Atul Chaturvedi, vice-president at Adani Exports.

"It will open up a four-million-tonne market to India," Chaturvedi said.

Traders said major wheat export contracts from Iraq, Africa and the Middle East were also expected to materialise in October once the quality problems were settled.

India, which resumed wheat exports last October after a gap of nearly three years, has set an export target of five million tonnes for 2001-02 (April-March).

The Indian government has been trying to tap the export market to cut its 30-million-tonne wheat stockpile but sales have been slow due to quality concerns and uncompetitive prices.

Several Indian firms had earlier this year won contracts to supply 350,000 tonnes of wheat to Iraq under the UN oil-for-food programme.

"Exporters are urging the food ministry to lift the ban on wheat sales to Iraq," said one trader. "Their LCs (letters of credit) have been extended up to September for movement of contracted quantities."

"By October exports should start to Africa where we see a big market," said an official of a leading grains exporting firm.

Another trader said global wheat prices were expected to improve after September when the USDA released its wheat crop estimates in the United States and Canada which are expected to be lower due to drought-like conditions in some areas.

"We see fresh wheat demand coming from Africa and the Middle East."

Traders in Singapore said on Wednesday that Vietnam had bought about 15,000 tonnes of Indian wheat for September-October shipment at about $115 a tonne C&F.

An official of an Indian state-trading firm said it had recently sold 30,000 tonnes of milling wheat to Malaysia at $102 FOB for delivery in September.

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